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Stocks closed the last trading day of both this holiday-shortened week and 2006 near their session lows, but the modest selling pressure took none of the shine off of what has been a very successful year overall for the market.

Next week, the markets will get a late start as the exchanges will be closed Tuesday, Jan. 2, to mark the passing of former President Gerald Ford.

Once again, RealMoney's bloggers were all over the market action, and we'd like to share the best of their commentary this week with readers of the TheStreet.com. These posts best capture the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day.

Let's take a look at Jim Cramer on the future of Under Armour, Rev Shark on how the close of the year may affect the beginning of 2007, Tony Crescenzi on six factors helping housing and Steve Smith on credit spreads.

Click here for information on RealMoney.com, where you can see all the blogs -- and reader's comments -- in real time.

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Jim Cramer's Blog: Under Armour May Have Storied Future

Originally published 12/26/2006 at 9:27 a.m.

Never like to be too anecdotal, but could it have been a more Under Armour(UA Quote) Christmas? As my 15-year-old daughter chats with the rest of her posse, the only thing anyone got -- besides the new long-battery iPod -- was an array of Under Armour girls' stuff, hoodies and the like, that left all other clothing in the dust. And last year it was all about Abercrombie & Fitch's(ANF Quote) Hollister brand.

Under Armour is the underdog. It is a brand and a company that are repeatedly counted out because of the crowded field dominated by the excellent-performing Nike(NKE Quote) and the almost-absent Reebok, now part of Adidas, that you have to believe will come spending back in America to revive its lost market share.

But what if Under Armour has cachet that isn't flash-in-the-pan? What if the brand just keeps growing? Those of you old enough to remember that Reebok at one time was just lowly RBOK, a short-term fad destined to fall on its spunky brand, have to believe that Under Armour can keep rolling.

Now it is true that in the late 1980s Reebok stumbled badly. But it never went away, and it most certainly grew into its market cap.

Too me, Under Armour could be the same. If you recall, Reebok, like Under Armour now, was very scrappy and not the least bit arrogant. It was always waging guerilla war on Nike. Under Armour's strategy is even more brilliant: Dominate niches that no one cares about and then weave those initiatives into something bigger.

Sure, anecdotal; but way too powerful to ignore.

At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.

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Rev Shark's Blog: Santa Might Beget the Grinch in '07

Originally published 12/28/2006 at 8:36 a.m.

"If you want a happy ending, that depends, of course, on where you stop your story."

-- Orson Welles

The 2006 stock market story is coming to an end at just the right time to produce a very happy ending. Unless something very dramatic happens in the next 48 hours, the DJIA and the S&P 500 are going to end up closing near their highs of the year. The Nasdaq and small-caps are lagging just a tad but still are going to finish with an impressive gain and not too far from their highs.

Should we care how the story ends? The media will certainly make sure we hear about how fantastic the year was for the markets. They will excite many investors into thinking things will continue unabated and will cause many others to feel extremely frustrated because they didn't do as well as the indices indicated.

It is probably a negative for early 2007 that we are closing 2006 so well. Emotions will be high when we kick off the new year and many will be looking for the uptrend to continue. Unfortunately, conditions change with a new year. There is an initial inflow of capital from retirement plans and such but the motivation to hold stocks up to preserve a track record abates and those waiting to defer tax liabilities no longer need to do so.

I believe a strong finish to 2006 coupled with a deluge of positive media reports about the market will set us up for a very nasty dip in January. That is still a little ways off but it is a seed that is firmly planted in the back of my mind and I will be particularly sensitive to any indications supporting that thinking. As I've discussed often, making bold predictions about the distant future is a waste of time but having a workable thesis for the near term helps ensure that you are not caught by surprise when conditions turn.

For now our focus is the end of the year. We had a very nice Santa Claus rally yesterday but it doesn't look to be carrying over to this morning. The nature of these end-of-years moves is to be choppy and inconsistent because volume is light and the trading is forced to a degree. The chances of a quick change in character are higher than usual and we need to keep that in mind.

We have a soft open on the way. European markets were mostly lower while Asia was mostly higher. Gold continues to rally and oil has a little bit of a bounce. Steve Jobs' option woes at Apple are dominating the news this morning but we also have some economic data coming up later that may be of import.

At the time of publication, DePorre had no positions in stock mentioned, although holdings can change at any time.

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Tony Crescenzi's Blog: Six Factors Helping Housing's Recovery

Originally published 12/27/2006 at 3:39 p.m.

The inventory adjustment process for the housing sector will last probably into 2008, but it should be shorter than the one that gripped the housing market in the early 1990s. There are six main reasons why I believe this will be the case:

1) Demographics are more powerful, meaning that household formation is higher today than it was in 1990. The key home-buying years are ages 25 to 29 and over 45 (for second homes). In 1990, the number of people turning 25 actually fell owing to the fact that fewer people were born in 1965 than in 1964, the last year of the baby boom. Moreover, the number of people ages 25 to 29 fell about 16% over the subsequent five years. This is not the case today, as the number of people turning 25 will be increasing in the five years ahead by about 6%. Similarly, the number of people turning 45 will be increasing much more than in the early '90s.

2) Inventory-to-sales ratios are lower today than they were at their peak in 1991. For example, the inventory-to-sales ratio for new homes today is at 6.3 months of supply compared with 9.4 months in January 1991.

3) The interest rate environment is better today than it was in the early '90s. Recall, for example, that the average rate for a 30-year fixed-rate mortgage was over 10% in 1990 and as high as 9.25% in 1994 when the bond market was fearful of an acceleration in the inflation rate. Today, years of success in controlling inflation has led to subdued inflation expectations, and the 30-year mortgage rate is at just 6.13%.

4) More of today's inventory burden is "professionally" managed. This is mainly because the nation's largest home builders control a greater share of the housing market than they did in the early '90s. The large home builders have the capital to hold on to inventory better than smaller builders, who are more likely to liquidate at much lower prices in order to raise capital. Builders have already cut back on building -- sharply -- and this should start to bring inventory levels down.

5) This particular factor is a bit weak at the moment because of the recent strength of the stock market. The fact is, however, that since 2000 the equity risk premium has increased, making alternative investments look relatively more attractive, including real estate.

6) Urban sprawl continues to increase, with suburbia high on the list for new households to find a place to live.

None of this is meant to say that the housing market will be strong in the months ahead. I mean only to show that there are a number of factors that will help to prevent an implosion in housing demand. So long as that is the case, the erosion in home prices won't be substantial relative to the amount that they increased in recent years. Although the negative effects from construction are likely to slow in 2007, the impact of other housing-related categories will increase.

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Options Blog: Compare Your Options

Originally published 12/27/2006 at 11:48 a.m.

In the Options Alerts model portfolio, I often sell vertical credit spreads. These consist of selling a higher-priced option and simultaneously buying a lower-priced option with the same expiration on a one-to-one basis in order to establish a directional position. Whenever I employ this strategy, I can count on getting a few questions.

The most common: Why did I decide to use this strategy? What are the advantages to using such a strategy over the more common debit spread, which is constructed through the purchase of a lower strike or more expensive option and the sale of a lower-priced option?

Let's start answering these by looking at vertical credit spreads have in common with debit spreads. Both are limited-risk positions. They mirror each other, being basically the inverse of each other. But their risk/reward profiles are very different. In a credit spread, you typically trade a lower maximum profit for a higher probability of profit.

Credit vs. Debit

For example, I recently wanted to establish a bearish position in Unibanco Brasileiros(UBB Quote) on the notion that the stock might be forming a double top at the $90 level. With the stock trading around $90.50 this morning, I could sell the January $90/$95 call spread for around a $2 net credit -- $2.50 for the $40 call and 50 cents for the $95 call.

To achieve the position's maximum profit, $2, all it takes is a 0.05% decline or for the shares of UBB to be at any price below $90 on the Jan. 19 expiration. The maximum loss is $3 and is incurred in UBB if it's above $95, a 5% move, on expiration. The breakeven point is $92 or a 2.2% increase in price. If the stock remains unchanged at $90.50, the position would realize a $1.50 profit.

Compare this to the similar bearish position of buying the $90/$85 puts spread for a net debit of $2 for the spread. In this case, the maximum profit of $3 is realized if shares decline below $85, a 5% price move. The maximum loss is just $2, but would be incurred if shares of UBB were at any price above $90 at expiration, meaning even a small decline in share price can result in the maximum loss. Note, the $95/90 bear put spread, which would cost $3 net debit, is the exact same as the $90/$95 credit call spread.

Controlling Risk

Because both are vertical spreads, the impact of changes in implied volatility, or vega risk, is greatly reduced. Vega measures how one percentage point change in implied volatility would affect the options price and is probably one of the most important of the greeks in determining a position's profitability.

It is also the most elusive, in that unlike time decay, or theta, which moves in only one direction and is easily measured, it's impossible to know which way or by how much IV will change. Anytime one can gain some control over a risk variable, it will help increase the probability of a profit.

In using strategies that are done for a net credit or establishing positions that look to collect premium income, it is crucial to control risk by using a spread; this simply means the number of option contracts you own or are long must be equal to or greater than the number of contracts sold short. If you have a greater number of short contracts or are "naked," the position's risk is theoretically unlimited.

What Covered Calls Really Cover

To this end, I've always believed that covered calls (being long stock and short calls on a one-to-one basis) are both misleading in name and somewhat misunderstood in application. The fact is that the risk/reward profile of covered calls is exactly the same as for selling the related put naked. That is, the upside profit is limited, but not the downside exposure, which is the price of the security or strike price minus the premium collected.

For example, with the Spyder Trust(SPY Quote) trading at $142, one can sell the January $142 call for around $1.50. This creates a covered call position whose maximum profit is $1.50 if SPY is above $142 on expiration and whose maximum risk is $140.50 per share. Or one could sell the January $142 put for $1.50 and have the same risk/reward profile.

One strategy that has worked wonderfully well this year is selling put spreads on the SPY or other broad market index products. The index's steady climb higher has been the perfect environment for this bullish income generation strategy. Of course, using a spread makes the profit lower than it is for selling an option outright or naked. But because the spread has a limited risk, one could increase the size of the position or number of contracts traded to raise the returns while still keeping the downside exposure to less than what it would be for a naked option.

The lower-priced long puts act like a natural stop, meaning that if there is a sharp decline, one does not need to scramble to defend the position. In this sense, a bull (credit) puts spread is very similar to creating a collar; that is, going long stock, short a call and long a put. But that discussion is for another time.

Be aware of the differences between what seem like similar positions. They're often quite different in how the prices behave. Quite often, strategies that appear to be different really represent the exact same position in terms of their risk and reward.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Unibanco Brasileiros to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.